The Legal Services Board (LSB) publishes today the findings of its research into alternative business structures (ABS) and investment in legal services. This includes the results of the largest ever survey of ABS.
The main objectives of this report have been to assess ABS investment activity, to consider whether there are any regulatory barriers to investment and to understand how attractive the legal services market is to investors.
Commenting on the research, Neil Buckley, LSB Chief Executive said:
“The investors we spoke to told us that they see opportunities for investment in the legal services market to improve efficiency, to fund innovation and to increase productivity. External capital is however not yet used as much in the legal services sector as might have been expected.
A significant majority of ABS firms (66%) either have already invested or are planning to do so, since they gained their ABS licence. This is positive evidence of the increased scale that allowing non-lawyer ownership was designed to enable. There is also evidence to link higher levels of non-lawyer ownership and the likelihood of having made an investment.
The research shows that there are no significant regulatory barriers to investment in the legal services market. Nor does the cost of legal services regulation seem to be a barrier. Instead the key challenges are cultural – lawyers are reluctant to cede control of their businesses, preferring instead to rely on profits and reserves, or bank lending.”
For further information, please contact the LSB’s Communications Manager, Vincent McGovern (020 7271 0068).
Notes for editors:
- The Evaluation: ABS and investment in legal services 2011/12 – 2016/17 report, a summary report and the annexes to the report can be found here.
- A short summary report can be found here. The annexes to the main report can be found here while the main data sets are here.
- This research was undertaken between October 2016 and April 2017 by the Legal Services Board (LSB).
- This report assess whether there are any regulatory barriers to investment in legal services. It addresses four questions:/
- What kind of investment activity has there been in ABS?
- Is the market attractive to all sources of finance?
- What do investors think of the legal services market?
- Are there any regulatory barriers to investment?
- The Competition and Markets Authority’s (CMA) final report and recommendations and further information about the process can be found here.
- The LSB’s initial response, and subsequent comments, to the CMA regarding this study can be found here.
- The Legal Services Act 2007 (the Act) created the LSB as a new regulator with responsibility for overseeing the regulation of legal services in England and Wales. The new regulatory regime became active on 1 January 2010.
- The LSB oversees nine approved regulators, which in turn regulate individual legal practitioners. The approved regulators, designated under Part 1 of Schedule 4 of the 2007 Act, are the Law Society, the Bar Council, the Master of the Faculties, the Chartered Institute of Legal Executives, the Council for Licensed Conveyancers, the Chartered Institute of Patent Attorneys, the Chartered Institute of Trade Mark Attorneys, the Association of Costs Lawyers and the Institute of Chartered Accountants in England and Wales.In addition, the Institute of Chartered Accountants of Scotland and the Association of Chartered Certified Accountants are listed as approved regulators in relation only to reserved probate activities.
- As at 1 April 2017, the legal profession in England and Wales comprised 148,690 solicitors, 15,281 barristers, 6,809 chartered legal executives and 5,958 other individuals operating in other areas of the legal profession such as conveyancing. The UK legal sector turnover was £31 billion per annum (2016) which is up 19% in cash terms since 2012. For more information see here.